SGX mainboard-listed Asia Fashion Holdings said it subsidiary has clinched a RMB381 million contract to supply its high-tech and eco-friendly construction materials to a subsidiary of one of China’s largest private petrochemical groups, the Ningxia Baota Petrochemical Group.
Asia Fashion said this is a repeat contract within 15 months, and a testament to the quality of its construction materials, particularly their fire-proof capabilities.
@ Xuzhou Zhongwei's plant. Photo: CompanyIt added that the new contract is expected to have a positive financial impact on its FY2015 results.
For this contract, Asia Fashion's subsidiary, Xuzhou Zhongwei, will supply to Baota’s two projects:
• A heavy aromatics and olefins utilization refine factory and economical recycle supporting facilities in Kuitun located within the Dushanzi Economic and Technological Development Zone in Xinjiang, China, and
• Baota’s chain of petrol kiosks in Northwest China.
Established in 1997, Baota Group specialises in the refining and trading of resources such as gasoline, diesel, petroleum gas, and heavy fuel, and is also in the industries of chemical research and production, education, finance and ecology.
Beijing Baota’s Executive Director and Baota Group’s Vice President Zhou Jiafeng commented, “As our petrol facilities deal with flammable and combustible liquids, we require high fire-proofing and retardant standards to ensure the stability of the structure in the event of fire or explosion. We found the solution in Xuzhou Zhongwei as its construction materials offers superiority to others.
"Apart from being water and sound-proof, Xuzhou Zhongwei’s materials possess high durability and do not contain chemicals harmful to the environment.
"More importantly, its materials are non-combustible with the highest industry grade of Class A1 and do not emit toxic fumes when heated.
"Following China’s “One Belt, One Road” national development strategy, Baota Group plans to continue increasing its investment in Northwest China. To support this plan, we will need reliable suppliers such as Xuzhou Zhongwei. As such, we look towards building a long-term partnership with Xuzhou Zhongwei through our ongoing and future developments.”
The Group has been focusing its efforts on penetrating the construction materials market to expand its direct and export sales network through cooperation with strategic partners and government agencies.
According to China Industrial Information Network, the total addressable market for the new material was RMB1 trillion, as at the end of 2013. (See ASIA FASHION: New biz has "potential to disrupt construction material market")
Neo Chee Beng, executive chairman of Asia Fashion, with CFO Jimmy Ng. NextInsight file photo.The Group has turned around in FY2014 with a revenue of RMB446.0 million and and net profit after tax attributable to shareholders of RMB15.7 million, respectively, thanks to its acquisition of Xuzhou Zhongwei through Rich Circles Enterprise on 12 June 2014.
Prior to its new material business, Asia Fashion had a fabric business which has been disposed of in February 2015.
Mr Neo Chee Beng, Executive Director of Xuzhou Zhongwei and Executive Chairman of Asia Fashion, said: “Apart from us having a strong conviction in the exceptional qualities of our products, this contract from Baota represents a strong vote of confidence in our capabilities.
"While we are gaining pace in the construction material market, we aim to harness opportunities from the RMB1 trillion market to continue our growth momentum. With a cautiously optimistic view of our construction material business, we hope to leverage on our first-mover advantage with our patented products and technologies to advance beyond our current sphere of network.”
The stock traded recently at 5.6 cents for a trailing PE of about 9X and a market cap of S$35.7 million.
